Family Law Watch: The Importance of Being Financially Savvy During Divorce

Not surprisingly, when couples divorce, the primary battle is often over money. Finances are at the center of many litigated issues related to divorce, including child support, spousal support and the division of assets and debts. That is why it is so important for individuals to be financially aware during the divorce process. An added plus is that attorney fees and costs can be minimized when individuals are knowledgeable about their finances.

With that in mind, what steps can individuals take to become financially savvy during divorce?

1. Become a Master of Organization – It is important for individuals to become organized during a divorce. This includes being organized with financial documents related to all accounts (including bank, investment, retirement and credit card accounts) opened before marriage, during marriage and after separation. There are many tools, including apps on personal electronic devices, that can assist individuals with organization. During divorce, individuals are required by the court to exchange financial information. The process becomes less overwhelming and costly when the documents are already organized and readily available.

2. Be In The Know: During marriage, the task of managing a family’s finances may fall on one person. Upon divorce, the other spouse may have little information regarding the assets and debts the parties accumulated during the marriage. It is important for individuals to take the reins of their finances and become educated as to what assets were acquired and what debts remain outstanding. Once individuals become financially aware, they are in a better position to figure out a budget and create a plan for their financial picture after divorce. This is especially important if children are involved and there are unexpected costs to consider as children grow up.

3. Open New Accounts: It is a good idea to open a new account after the date of separation. California is a community property state, which means any income earned after separation is separate property. Opening a separate account for separate property income will allow individuals to keep better track of what is separate property and what is community property.
Divorce can easily wreak havoc on personal finances. Getting organized and being aware of the assets, debts, and income involved will be key in creating a foundation for a healthy financial picture going forward.